James Pallotta to Shut Down Raptor Global Hedge Fund

Date: Wednesday, June 3, 2009
Author: Saijel Kishan, Bloomberg

James Pallotta, the investment manager who split with longtime partner Paul Tudor Jones at the start of the year, will shut his Raptor Global Funds, saying he doubted the hedge-fund industry could sustain its short-term focus.

Pallotta, who lost 20 percent last year and is little changed in 2009, will begin returning money to clients in July, according to a letter sent today to investors. He said he plans to take several months off while he develops a new investment strategy.

“In recent years, I have conveyed my skepticism regarding the sustainability of certain aspects of the industry’s structure and short-term focus,” Pallotta, 51, said in the letter, a copy of which was obtained by Bloomberg News.

A record 1,471 hedge funds, or 15 percent, of the industry, shut down last year after managers posted record losses, according to Hedge Fund Research Inc.

Pallotta, who owns a stake in the Boston Celtics professional basketball team, managed $5 billion at Tudor Investment Corp. as recently as August 2008. He spun off with about $1.5 billion after losses of about 20 percent and client withdrawals last year. His Boston-based firm, Raptor Capital Management LP, said it was halting investor withdrawals.

The fund has mainly held cash this year. Investors will receive about 75 percent of their money by early next month and an in-kind distribution of a pro rata interest in the Raptor Private Portfolio, which accounts for about 15 percent of clients’ investments. Remaining money will be returned “as soon as is practicable,” Pallotta wrote.

The Raptor Global fund has returned an annualized 14 percent since it was started in October 1993 at Greenwich, Connecticut-based Tudor, according to the letter.

Jonathan Gasthalter, a spokesman for Raptor, declined to comment.

To contact the reporter on this story: Saijel Kishan in New York at skishan@bloomberg.net